Small and medium-sized enterprises (SMEs) play a significant role in contributing and sustaining our societies. This is no different in Asian countries. So, it is unsurprising that SMEs account for over 98% of all Asian businesses as it offers about half of the private sector jobs on the continent.
SMEs have become crucial for the success of economies, making it essential to have various functioning support measures for these firms. Yet, SMEs are often faced with significant challenges, which includes access to business financing. It has been an issue that is largely due to the lack of information, as well as the high risk involved in these transactions. Therefore resulting in more collateral requirements in terms of lending to SMEs. This could potentially stunt their growth if it is not utilised properly.
Are There SME Financing Options in Singapore?
Business financing are needed to serve various purposes. It can help SMEs to navigate through tough periods, and to improve business capabilities as they aim to remain competitive and sustainable.
1. Traditional Banks
Banks are financial institutions with a physical presence in the markets they operate in. As covered in our previous article, these institutions put their applicants through a much more stringent loan assessment process. Hence, obtaining any loan could be challenging for SMEs who do not meet their requirements
2. Government Financing Schemes
The government offers a range of financing options under the Enterprise Financing Scheme (EFS). At any growth stage, SMEs can make the most of these loans to create products, facilitate expansion, and gain capabilities. With the introduction of the SME Working Capital Loan, SMEs across various industries can gain access to additional funding for the benefit of their business. Moreover, the government incurs a co-risk share of the borrowing amount.
3. Sustainable Financing Grants
Environmental, social, and governance (ESG) encourages more businesses to consider sustainability and to safeguard the future of Singapore. Equally important, it has allowed for a significant number of partnerships from investors who wants to associate themselves with businesses that are contributing to this goal. The Monetary Authority of Singapore encourages companies that are on a green path by launching a grant scheme for SMEs to achieve their sustainability goals.
Sustainability financing function like regular loans, and they can help businesses move towards green transformations by paying off costs.
Despite the multiple options of business financing that are available to SMEs, it often proves difficult for newer SMEs to access due to information asymmetries. Furthermore, banks and other financial institutions often discover weak financial infrastructure among newer SMEs, thus creating obstacles to extending credit to them.
Is there a way to bridge such a gap? The next section will explain this better.
Private Lenders Can Finance SMEs
Traditional banks are not always willing to provide financing for SMEs unless there is adequate collateral. Poss Capital is here to bridge the financing gap by providing an alternative source of capital. Business owners can obtain additional financing and focus on effectively growing the business. We have an understanding of how specific industries work, and can focus our resources accordingly to your business needs. Click here to apply today!
Access to Funds When You Need Them The Most
SMEs are essential in most countries, contributing significantly to economic growth and employment. But yet, applying for a loan is often challenging, regardless of the available options. Thus, private lenders are a good option to consider. Accessing these funds is quick and is subject to fewer requirements. Contact us today, and let’s help you get there faster.